CV Sciences Inc (CVSI)

[Det_Robert_Thorne]

Possibly the drug division. Don't like conversion feature.

The $2M is hopefully for the development of the drug division, but I am concerned that this note is convertible on the following terms:

Commencing on the date that is six (6) months from the issuance of the Note, Investor may redeem a portion of the Note in monthly amounts not to exceed $275,000. Provided the Company has not suffered an "Event of Default" and is in compliance with certain "Equity Conditions" (unless waived by Investor in either case), the Company may make redemption payments by the issuance of common stock in lieu of cash payments. If the Company chooses to make redemption payments in stock, the number of shares issuable shall be determined based upon a price per share equal to the lesser of $0.50 per share or 70% of the average of the three (3) lowest closing bid prices in the previous twenty (20) trading days; provided, however, that the percentage reflected above (the "Conversion Factor") shall adjust downward if (a) the 20-day average bid price is below $0.25 per share (in which case the Conversion Factor shall be reduced by 10%), (b) the Company is not DWAC eligible (in which case the Conversion Factor shall be reduced by 5%), (c) there has occurred a "Major Default" (in which case the Conversion Factor shall be reduced by 5% for each Major Default). [Emphasis Added]

https://www.sec.gov/Archives/edgar/data/1510964/000101968716006473/cvsciences_8k.htm

IOW, six months from now, on or about November 25, 2016, Iliad Research and Trading (the noteholder) will be able to begin to convert the note to shares at a rate of $275K/month at $0.50/share or less (depending upon the stock price).

I'm not a fan of convertible loans, and have exited my small longer-term hold position, but might situationally trade it in the future.